Capitol Commentary - SGU May 2009

Capitol Commentary

By Maggie Hershey, Sr. Director, NA Public Policy, SEMI

On President Obama’s 100th day in office, SEMI member companies met in Washington to press government officials to increase their commitment to policies promoting innovation in the United States. The SEMI 2009 Washington Forum was held April 29 with over 20 industry executives meeting more than two dozen policymakers. During the Forum, SEMI presented the annual North America Government Leadership Award to Sen. Kirsten Gillibrand (D-NY) (see related article).

The Washington Forum included members of the North America Advisory Board and other senior industry executives who came to Washington to educate officials and push for policies that benefit the industry. The executives were mobilized in small groups to lobby on specific issues. The themes this year focused on solar energy/PV, R&D and export control reform.

Given the industry’s growing involvement in photovoltaic manufacturing and the rise in new energy-related government initiatives, two teams were dedicated to solar energy/PV lobbying issues. They met with officials from the Department of Energy and senior staff from the House Energy and Commerce Committee. The teams also conferred with three Members of Congress, the Chief Tax Counsel for the Ways and Means Committee and several other senior congressional aides.

The solar teams discussed the grants and other provisions supporting alternative energy that were passed as part of the stimulus bill. The Department of Energy expects to release more details about grant opportunities this month. The teams also discussed tax credits, the potential creation of a “Clean Energy Bank” to provide loan guarantees and direct loans for solar projects and the formation of a new Advanced Research Projects Agency – Energy.

A key topic for the meeting with the House Energy and Commerce Committee was the climate change proposal currently under consideration. The cap-and-trade portion of the bill includes provisions related to fluorinated greenhouse gases such as NF3 that are used in semiconductor production. The SEMI team urged the committee staff to modify the bill to adopt a downstream control at the facility level for these gases if they are included in a climate change bill rather than controlling them at the gas production or importation source.

We are planning a lobby day on solar energy issues for October 1 and we encourage you to email semidc@semi.org if you are interested in participating.

R&D

Two teams also lobbied on a range of innovation issues with an emphasis on federal investments in R&D and extension of the R&D tax credit. These teams met with the White House Office of Science and Technology Policy and Science Committee Chairman Bart Gordon (D-TN). In addition, the teams met with three Members of Congress and several congressional aides.

President Obama recently made a major announcement about the U.S. government’s commitment to basic science. In a speech to the National Academy of Sciences, Obama pledged to invest three percent of GDP in science and to double the budgets of three key science agencies— the National Science Foundation, the National Institute for Standards and Technology and the Department of Energy’s Office of Science. He also pledged to improve math and science education and to make a national commitment to clean energy.

The SEMI teams urged Congress to support these goals and to approve necessary funding. The recently passed stimulus bill included unprecedented investments in science. Appropriators will be called on to make hard decisions during the difficult fiscal environment this year and SEMI urges the government to continue this commitment to innovation.

The SEMI lobby groups also advised Congress to renew the R&D tax credit before it expires December 31, 2009. This credit has lapsed 13 times since it was created in 1981. SEMI urges the Congress and Obama Administration to make it permanent so that companies can count on this important tax incentive when making their decisions about R&D investments.

Export Control Reform

Export control issues continue to be a top policy priority for SEMI since member companies derive the vast majority of their revenues from overseas sales. The Washington Forum export control team met with officials from the Departments of Commerce, State, Defense and the National Security Council.

A major goal for this team was to push for continuation and expansion of the Validated End-User (VEU) program. This program provides streamlined licensing for pre-approved companies doing business China. The program has encountered some challenges although many of these have been addressed by a recent agreement between the U.S. and Chinese governments on end-use visits. During the Washington Forum, the agency officials announced that they have approved additions to the Validated End-User program for China. In addition to the five existing VEUs, the government approved Aviza Technology China as a VEU and they expanded the range of approval for current Validated End-User Applied Materials.

There is some interest in government circles in conducting a fundamental review of export control reform to modernize the control list, streamline licensing and revise visa rules. SEMI supports this effort and continues to meet with policymakers on these issues.

Other Meetings

Several members met with the co-chairs of the House High-Tech Caucus, Representatives Anna Eshoo (D-CA) and Michael McCaul (R-TX). This is a bi-partisan group in the House focused on innovation issues. Eshoo and McCaul discussed government initiatives to promote solar energy and their commitment to make progress on an innovation agenda this year.

The SEMI industry executives opened the Washington Forum with remarks by Bill Reinsch, President of the National Foreign Trade Council and former Undersecretary of Commerce for Export Administration. Mr. Reinsch discussed the prospects for export control reform and progress on trade policy issues. He also raised an issue of increasing importance— the potential elimination of tax deferral rules on U.S. corporations’ overseas earnings.

Current U.S. tax law allows companies to avoid taxes on much of their overseas earnings if the funds remain offshore. This levels the playing field since many other countries do not tax their companies’ overseas earnings. The Administration proposes to change these rules which could result in a tax increase for many SEMI members. Given the potential impact on industry, the business community has organized a coalition to share resources in an effort to defeat this proposal. To learn more about this issue, please contact the SEMI Washington office at semidc@semi.org or visit the Promoting America’s Competitive Edge coalition website at www.pace4jobs.org.

Washington Forum attendees also welcomed guest speaker Peter Cleveland, VP of Legal and Corporate Affairs and Director of Global Public Policy for Intel. Mr. Cleveland is also the former Chief of Staff to Sen. Dianne Feinstein (D-CA). He discussed Intel’s public policy priorities and shared his perspective on how companies can effectively work with Capitol Hill.

While the SEMI Washington Forum is the association’s annual lobby day, member companies are encouraged to visit Washington at any time. SEMI staff can help arrange meetings with key officials and provide updates on key policy issues. If you are interested in participating in a lobby day on solar energy issues on October 1, please email me at semidc@semi.org.